JEFF SALWAY

An overhaul of consumer rules are the biggest change in a generation, says Jeff Salway

New refund rights on purchases and greater protection when buying digital content and services form part of a radical overhaul of consumer rights rules taking effect next week. The Consumer Rights Act 2015 becomes legislation on 1 October in what amounts to “the biggest shake up of consumer law for a generation”, according to former business secretary Vince Cable.

The act replaces three strands of legislation that have long been familiar in the UK – the Sale of Goods Act, Unfair Terms in Consumer Contracts Regulations and the Supply of Goods and Services Act.

“It does however introduce new, and clarify existing, rights and remedies for consumers,” said Neil Campbell, solicitor in banking and finance at Shepherd and Wedderburn.

“These rights and remedies are written in general terms relating to ‘goods’ and ‘services’ but are just as applicable to financial services products or services as they are other products or services.”

Here are some of the changes that it’s worth being aware of.

Digital purchases

This covers the rights consumers have when digital content is faulty, such as getting a repair or replacement of online music, games, films, computer software and mobile phone apps, among others. It includes digital content that has been supplied for free as part of a package with items that have been paid for, while consumers now have clearer compensation rights if faulty digital content damages their own device. Peter Haveron, senior wealth manager at French Duncan Wealth Management, said: “The law here has been unclear up until now and this change brings us up to date with how digital products have evolved.”

Service delivery

The new rules clarify what should happen if a service isn’t provided with “reasonable care and skill or as as agreed”. Firms have an obligation to either pay a refund or bring the service in line with the pre-contractual information. This could be particularly relevant to financial services, said “If, for example, a bank or lender makes a statement or provides information to a consumer and this is taken into account when the consumer decides to purchase the services, this statement/information will be implied into the contract,” said Campbell. “If it proves to be false or incorrect then the bank or lender could find themselves in breach of contract, meaning the consumer can exercise their remedies under the contract.” ●

Rejection period

From 1 October there will be a 30-day period during which you can return something faulty and claim for a refund, whereas the previous act simply said this should be done within a ‘reasonable time’. “Firms that fail to make their terms and conditions fully transparent and accurate risk a rise in the number of customers seeking refunds and it is worth noting that, under the terms of the Act, consumers are likely to be given the benefit of the doubt as to how any potentially misleading advertising is interpreted,” said Haveron. The ‘early right to reject’ clause may be of particular interest to people making significant purchases such as cars, due to the cost and the ramifications of a faulty purchase. The seller or the manufacturer has to replace or repair it within six months and failure to do so means the buyer is entitled to a full or part refund.

In many industries, not least financial services, some of the most important details – like the price and any extra charges – are hidden away in the small print, as firms were merely obliged to make that information legible. Under the updated act they must do more to bring the key details of the contract to the consumer’s attention, by making it transparent - i.e in plain English - and prominent. It’s the prominence of the important details that’s new, having not been covered by the previous legislation. “Banks and other lenders may wish to look again at certain charges (such as account or mortgage charges) in light of the new legislation, as well as how they highlight and bring prices and tariffs to the attention of consumers,” said Campbell.

Tiered remedy

The Act also includes changes to your refund rights, which will now be dictated by the nature of the service you’ve received (including digital) and how long you’ve owned it. The key to all this being effective lies with the consumer. The more you have an idea of your rights when buying products and services, the less likely it is that firms will get away with treating you unfairly or failing to deliver on their promises.